Invest with Jac's is a blog to share my personal investment views on how to start and continue to look for valuable companies and properties to invest in.

Wednesday, August 31, 2011

INV101 Buy or stockpile when the chance arises.

It has been a volatile month in August. Stock prices experienced wild roller coaster rides once again. Now, it has stablised at pre-US credit downgrade level. There will be bound to be some winners and some losers, but the overall winners are value investors.

Value investors took the opportunities at low prices and stockpile more shares of the companies that we have invested in. The returns on investment are high, compared to the banks' interest rates. Even a 5% gain in share price is reasonable. However, it is not the short term profit that we are looking at. We are looking at their long term value.

Even before the August wild ride, value investors have our personal valuation of companies. We have the money, that we continue to save each day. All we need is to wait for a very good chance to strike.

After the announcement of US credit downgrade, markets were switched to panic selling mode. Short term investors and speculations were busy selling their shares. Prices were depressed by about 15%. This percentage was actually the discount to value investors. We see it as buying valuable shares at a 15% discount.

In the world of investment, patience is the master key to making money. When times are good, we should continue to save more money from our salary and when noises create havoc in the stock market, we will strike with the money ready in hand. This is the way investment should be done.